Two U.S. companies revoked their proposals to launch bitcoin exchange-traded funds because of enduring concerns from the Securities and Exchange Commission (SEC), according to filings.
Staff at the regulatory agency had “expressed concerns regarding the liquidity and valuation” of futures contracts founded on a digital asset. This is another obstacle Wall Street will have to tackle prior to being able to capitalize on investors’ interest of cryptocurrencies. This move also shows the difference regarding how two financial regulatory agencies would like to regulate the digital assets.
Trusts controlled by Rafferty Asset Management LLC and Exchange Traded Concepts LLC each trashed their plans of launching three separate bitcoin funds that would be able to be traded by investors just as stocks are. The fund managers were optimistic regarding the approval of their proposals, especially after the last month’s launch of contracts based on bitcoin on both the CME and the CBOE exchanges.
Regulators have been struggling with how to deal with the digital assets, and no single agency has sole control.
The SEC has control over funds, while the Commodity Futures Trading Commission (CFTC) oversees futures contracts. The CFTC has been criticized for not fully assessing the dangers that a cryptocurrency, bitcoin specifically, could pose to the financial system. Bitcoin is a virtual asset that can be utilized to move money quickly and anonymously around the world. It does not require a central authority, such as a bank or government and trading has been quite volatile and expensive.
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One of the ETFs that was proposed would have been created to rise or fall in price twice as fast as the price of bitcoin on any given day. Over just the last two years, bitcoin has either gained or lost over 10 percent on a single day 26 different times, according to data on the Bitstamp exchange.
Neither the SEC or the CFTC could be immediately reached for comment.